Year: 2008
Type: article
Abstract: We analyse the impact of tax policy on firms' leverage ratios in a balanced panel of 129 medium‐sized listed European companies from 1993 to 2005. A general model of company leverage is applied within which King's tax ratios are used to capture tax policy changes, controlling for non‐tax influences. Leverage measures studied include total, long‐term and short‐term debt. A generalized method of moments estimator is used to control for endogeneity. The results suggest that tax policy has a significant but small impact on firms' debt ratios and that non‐debt tax shields are a substitute for debt in company activities.
Source: Manchester School
Authors: YUE CHENG, CHRISTOPHER J. GREEN
Institution: Loughborough University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2011513573